Update: are you over the moon with Lloyds’ new approach to overdrafts?

Lloyds Banking Group is reshaping its overdrafts to make them simpler. However, whether they will prove less costly for everyone is yet to be seen. How will these changes affect you?

In some very welcome news, we’re pleased to tell you that there has been some significant progress in our campaign against exorbitant unarranged overdraft fees. Today, Lloyds Banking Group has announced it is doing away with these fees.

This positive step sees Lloyds Bank, Bank of Scotland and Halifax simplifying their policies so that all fees and charges for unarranged overdrafts will be removed and, instead, all customers will pay a simple daily rate for using an overdraft with charges assessed on how much customers borrow and for how long. This new policy is due to be introduced in November.

Industry change is overdue

As you may know, unarranged overdraft fees have been a significant concern for Which? given the consumer harm caused by these charges, and we’ve been campaigning for change. What Lloyds has shown is that it is possible for banks to improve the way they operate their overdraft systems and therefore we now look to the other banks to follow suit.

This is, of course, not a magic solution – not everyone will be better off from this. So, it is critical that Lloyds Banking Group supports customers to help them avoid high charges and to reduce their level of debt.

Supporters helping bring about change

In order to show the harm caused by unarranged overdraft fees, today Which? submitted an evidence dossier to the Financial Conduct Authority (FCA) using the experiences that have been shared with us on Which? conversation and by supporters of the campaign. A lot of statistics have been bandied about in the overdrafts debate, but we wanted to ensure impact on individuals and their families is recognised and properly understood.

We heard from a lot of people with the same concerns as Adrian:

‘My bank charged me but it was their charges that sent me overdrawn and each month it becomes a vicious cycle. I’m on disability benefits, so I have limited income.’

Extortionate, disproportionate fees featured heavily in the stories we heard, like Mike’s:

‘My bank also charged me £30 per day for being overdrawn for just £2 for a total of 20 days. Then they also charged me with an unauthorised overdraft of another £30+ interest! Total cost nearly £1000 which was more than my wages! So I kept getting charged every month!’

Flo’s relation suffered a particular injustice when it came to fees and charges for letters:

‘The action of one bank caused a relative’s bankruptcy. If they went overdrawn, not only were they charged £70 for a letter but also another £80 for the unauthorised debt that the cost of the letter caused. This would then trigger another letter at £70. And so on. Despite this they offered to give them a loan as long as previous loans, some of which were nearly paid off, were consolidated into a new loan, ie ‘churning’. By their actions they caused more debt.’

Click the image above to the read our overdrafts dossier to the FCA. (PDF 1.9Kb)

We’re banking on further change

The FCA is currently reviewing high cost short term credit (including overdrafts) and we want it to use this review to ensure other banks follow Lloyds’s lead by restricting unarranged overdraft charges to the same level as for arranged overdrafts.

So, while it’s a big step forward today we know there’s still lots more to be done in this area. Hopefully our dossier of your experiences will help to make more change possible. Thank you to you all for sharing your experiences with us, enabling us to show the real life detriment felt by consumers.

Update: 2 November 2017

As of today, unarranged overdraft charges and monthly overdraft usage fees have been scrapped for Lloyds, Halifax and Bank of Scotland customers.

Overdraft customers of these three banks will instead pay a new flat fee of 1p a day for every £7 they borrow. So those who find themselves dipping into their overdrafts for should be slightly better off from today.

We first heard about this news back in July and welcomed the move by these banks. It’s a big step forward in limiting unarranged overdraft charges and bringing these fees more in line with those for arranged overdrafts. We now want to see other banks to follow suit and bring an end to these extortionate charges.

Are you an overdraft user? Have you been affected by extortionate fees in the past? Tell us whether you’re looking forward to these new changes, and why, below.

I have a significant overdraft facility which I have had for 30 years and have been a Lloyds Bank customer for over 50 years. I use this facility a lot but regularly pay money into my account which either eliminates my overdraft or substantially reduces it. This costs me around £1,800 per year but they now want over £5,000 for the same usage.
I went into a Lloyds Bank this morning and they confirmed the figures.
Shylock only required a pound of flesh – Lloyds want to totally fleece this OAP!

Rod, my bank charges 50p a day if I go into overdraft up to my limit. Would this be a better arrangement for you? Alternatively, could you take out a personal loan and top up your account with it, rather than using an overdraft?

I have had an arranged overdraft of £6000 for many years and it cost me approx £75-£80 per month.
I never go over the limit, but have been unable to reduce it.
As from November the fees will increase to £265 per month – taken on a daily basis
I work full time but I am in financial difficulties and unable to get a loan
This will all but bancrupt me

It might be worth talking over your problems with Citizens Advice as soon as possible, Bill. Your interest is helping to subsidise free banking for those of us who manage to stay in credit and few seem to care.

Have you tried to get a personal loan from your bank to put your account in credit? Have you discussed your problem with your bank to see how best to deal with your situation? It is nonsense to pay £3180 a year to service a £6000 overdraft. Seemingly one consequence of Lloyds policy of making unarranged overdrafts as acceptable as arranged. It raised the effective interest rate for higher overdraft users to over 60%, according to a report I saw. Presumably why your new charge has rocketed.

Lloyds will not entertain a loan to pay off the overdraft. I spent over 1 1/2 hrs on the phone to them yesterday. All they could suggest was to speak to a debt company helpline. I have banked with them since 1980 and have never incurred late charges or gone over my limit.
I am currently trying to arrange a loan with someone (at higher interst rates). Failing that – a DMP or bankruptcy beckons

A colleague I know has an overdraft of £15000 with Lloyds. I informed him yesterday of their plans come November 2nd and he is really worried (his payments will be £664 per month (taken from his account at £21.43 per day)

Clearly untenable situations. If both these examples pay the full cost of their overdraft each month, it suggests they were not in a position to gradually reduce their overdraft anyway; now it has been made impossible. Imposing such high new charges without providing a way out for existing users seems totally wrong; I consider they should apply to new users only, at least for a long enough period to allow existing users to sort out their finances.“Arranged overdraft fees will be a flat rate of 1p per £7 borrowed.
There won’t be any unarranged overdraft fees and charges.
There’ll be no fees for missed payments.
Fee-free buffers on many accounts (eg, £25 on Lloyds/Bank of Scotland Classic and £50 on Halifax Reward) will be reduced to £6.99.
Overdraft fees will be charged at the end of each day rather than once a month.
All customers who’ve given their mobile number will be sent text alerts when their balances are low.”

1p doesn’t sound much. does it. but on £1000 it is £1.43 a day, and presumably the charges are made on overdraft fees as well. Simple interest would make this £522 a year – 52% interest – but the compounding of the charges will increase this. The daily interest rate is 0.143%. After 365 days the debt will be £1684.60 – an APR of 68.46%.

“If you use an arranged overdraft of more than £650ish. You’ll probably be worse off.
You’ll be contacted at least two months ahead of the changes, and if you’re one of the people who’ll be worse off, will be offered a “tailored transition plan” to review other possible options. ” Has anyone been offered
acceptable options?

The only suggestion I can currently offer is to sell some assets to pay off your overdraft, or reduce it to a level where these excessive charges do not apply.

Amen. I am currently scouring the house to see if there is anything we can sell to reduce the O/D. Failing that, I have been advised that a DMP or Bankrupcy is the best way forward.
Lloys did offer to put me in ‘Collections’ – basically, they would remove my O/D facility and not allow me to withraw any of my wages without prior aproval from themselves – hmmmmm seems fair ………

Thanks for the thoughts and advice Malcolm,
The car is a tricky one – I always had cheap runarounds, but because my employed work is a 35 mile round trip, it needs to be reliable & economical so I have a car on pcp . (public transport is a no-go for me as there are only 3 buses per day in my village and they take me off in the wrong direction)
I have a 2nd job running an e-bay business (self-employed) and this also requires transport to source stock.
I am of an age where future credit/finance is probably not going to be required (too old for a mortgage and all kids now married off)

I feel a little ‘stitched ip’ because some years ago, I had a one to one meeting with my ‘personal account manger’ and was advised at the time to use the O/D facility because it was simpler and quicker to set up and would not cost as much as a personal loan.
I simply got used to using it and never got into the position to reduce it.
I still cannot believe that Lloyds are hiking the cost by 350% per month

Bill, its only thoughts – I can’t give you advice. You seem to be doing all you can to help yourself. It would be a shame to give up and go bankrupt. PCP seems an expensive option perhaps, and plenty of reliable small cars are around. But I guess opting out of a PCP and then putting the money together for a purchase will be tricky. Is your employer in any position to help?

Sorry, this is all getting too personal. Lloyds should be explaining why they can suddenly impose huge extra charges on existing borrowers whose financial affairs have been planned around a particular arrangement.
Jane – will Which? ask Lloyds how they propose to help people like Bill and Rod?

Both my banks, and Lloyds, and presumably others, are now charging a daily fee for using your overdraft. Mine is very much for emergency use, not a form of permanent borrowing; this is, I believe, what an arranged overdraft should be used for, where extra money (that you can afford to pay back quite quickly) is needed for a relatively short time. A personal loan is more appropriate for longer term borrowing.

However, these daily fees lead to silly outcomes as we see from the above posts. Suppose my limit is £1000, and I use £800; cost 365 x £0.50 = £182.50. So I don’t exceed my limit and pay an effective interest rate of around 22.8% APR. If I use £100, I still pay an extra £182.50 in fees, so the APR leaps to 182.5%. (still much better than a pay day loan. But extortionate none the less).

I believe we should be campaigning for the charge on arranged overdrafts to be either an interest rate irrespective of the amount used (up to your limit) – say 18% like many credit cards – or a fixed daily amount if that is less.

wavechange, I was not suggesting it should be, simply giving a figure many already pay by using their credit card. However, if an overdraft is used as I believe it should be, for a very short term need, then £1000 for a month should cost around £15 even if the interest rate were 18%. I’m happy to debate what the % should be.

It was the principle I was concerned about rather than deciding a figure. 🙂

Will you support Which? being asked to question daily fees and replace them with a % interest rate?

Fair enough, Malcolm, but that’s another punitive charge in my opinion. At least a credit card offers a generous free credit period and customer protection (Section 75) for purchases over £100. I would be interested to know what charge the banks would on average have to levy to break even on overdrafts and suggest that they should not be allowed to charge very much more.

in the same boat as others with £3000 overdraft and salary dropped from take home of £2000 a month to £1000 per month since had to take early retirement due to ill heath,now unable to reduce overdraft and charges will rise from £50 per month to £126 per month,so left with just £120 money for month after all regular fixed expenses, this is extortion??????? a very fair way to help long standing customers????? just to help a few who should not have used unauthorised lending anyway,at least it was capped at £90 per month,I would love to go back to that it was a bargain compared to this situation..

Do not borrow any money at all unless you are completely certain you can repay under any circumstances because you can never be sure what might happen in the future as you have just discovered Try becoming bankrupt ?

I have had what was originally called a “Budget Account ” with Lloyds since 1965 and pay a set amount monthly into my account from my current account. This account enabled me to keep my bills separate and has worked well for the 53 years it has been running. In my current account is a substantial credit but I receive no interest on this as I would not transfer any Direct Debits to it as I wished to keep the two separate.
The new interest rate makes my Budget Account too costly to run. I have therefore just transferred all my business including my Platinum Credit Card to another Bank who was happy to maintain the existing rates as I had with Lloyds.
Lloyds were not bothered in the slightest to have me change accounts which they had held for a total of 56 years and in fact their letter encourages customers customers who are badly affected by the new rates to go elsewhere!
What a Bank!

Hello, for those of you who recall this discussion from July I thought I’d update you to let you know that as of today, unarranged overdraft charges and monthly overdraft usage fees have been scrapped for Lloyds, Halifax and Bank of Scotland customers.

Overdraft customers of these three banks will instead pay a new flat fee of 1p a day for every £7 they borrow. So those who find themselves dipping into their overdrafts for should be slightly better off from today. It’s a big step forward in limiting unarranged overdraft charges and bringing these fees more in line with those for arranged overdrafts. We now want to see other banks to follow suit and bring an end to these extortionate charges.

By all means bring an end to extortionate charges. But what is then the point in being a responsible customer who keeps proper tabs on their financial affairs and who agrees an arranged overdraft facility with their bank – one the latter presumably thinks the customer can afford and repay if it is used? In contrast, one who does not have their bank’s agreement may well try to borrow money they are in no good position to repay. One solution might be to simply ban unarranged overdrafts to prevent customers getting into a more severe financial problem.

Hello these new charges brought in November is a very devious move. This daily charge is netting Lloyds more more money than previous charge. Briefly my £1400 agreed overdraft
monthly fee would vary between £28 to £32 per month. From Nov 2017 i am now facing double fees plus ie £64+. Lloyds new overdraft stealth move is very cruel and cold blooded. So all those that are praising this new Overdraft Stealth Tax think again. Lloyds new Overdraft system will force people to leave in a mass exodus or bankruptcy. I am a pensioner and its crippling me already.
A New Campaign needs to be started to combat / fight Lloyds Overdraft Stealth Tax.
Will gladly put my name to a petition.

Lloyd’s arranged (and unarranged) fee of 1p per £7 borrowed per day sounds attractive perhaps at first sight, but then multiply by 365 and, of course, it amounts to £3.65 a year – over half what you borrow. If you find yourself in need of a temporary loan, say £500 for a couple of weeks to cover an unexpected outlay, but then repay then the cost of £9.86 might seem reasonable. But not if it is not repaid. Overdrafts are designed for short-term emergency use, not as a long term loan; there are far better ways, such as a personal loan or even, at worst, using your credit card.

I’m on the new 1p flat rate daily fee with Hbos – but I’m confused (easily done!). I’m £66 short of my £1350 authorised OD limit , but instead of paying the previous £6 monthly fee, I’ve had £1.83 daily fee debited two days in a row with no withdrawals. Does this mean that if I go up to my limit (more than likely given my DDs and that I’m unemployed (only one payment going in each month), that I’m going to be charged over £54 per month? Help.

If your fees take you over your limit you will still only pay based on your planned (arranged) limit. However Lloyds may not make any payments from your account that take you over your limit (£0 in the case of no arrangement). So it could prove awkward if your monthly car insurance DD isn’t paid, for example.
Their Ts&Cs:
“On an account with a Planned Overdraft limit, if you try to make a payment that would take your account over your Planned Overdraft limit, we may not make that payment. On an account without a Planned Overdraft limit, if you try to make a payment that would take your account overdrawn, we may not make that payment.
We won’t charge you any fees for refusing or trying to refuse your requested payments. But we will continue to charge a daily overdraft fee for your use of a Planned Overdraft if any fees or payments take, or have taken, your account above your Planned Overdraft limit. In this case, the daily overdraft fee will not exceed the maximum daily overdraft fee you would pay. For example, if your Planned Overdraft limit was £140 and the daily overdraft fee for this was 20p a day, you would not pay more than this even if you were overdrawn by more than £140”

If you think 1p a day for every £7 overdrawn is a bargain, it is around 52% annual interest. There are better ways of borrowing money.

I’ve never gone over my limit. Not in the 11 years I’ve banked with HBoS.
I think it’s scandalous that they’re getting away with this.
Why should those of us with authorised ODs and don’t go over our limits be charged these ridiculous daily fees (the £6 month fee was so much better).
My OD is the only way I can live at the moment until I get work and I’ve budgeted for all my outgoings, I make the minimum payments on utilities etc and I’ve never missed a bill or rent payment.
I’m so angry that I cannot sleep worrying about this.

Never had an overdraft option on any account I have had and never needed one even though my income has only been small at times I do not live beyond my means as many must try to do Banks must make money in some way usually from those who borrow from them

It is very useful to have an overdraft facility for unexpected contingencies where additional expenditure is required. Most people have such an emergency from time to time and it might not be possible to make a formal arrangement before issuing a cheque or making a payment. For that purpose I can appreciate the benefit of harmonised rates between arranged and unarranged over-drawings. But I also support Malcolm’s point about the lack of an incentive to manage personal finances if the interest and charges are identical for both arranged and unarranged overdrafts. Too much of the policy attitude on this question is driven by a hard-line and judgemental presumption that these states represent responsible and irresponsible money-management. It takes no account of background circumstances. Perhaps bank managers are no longer capable of making those nuanced judgments that will produce a bespoke get-me-out-of-debt plan that both the bank and the customer have a stake in.

The problem in all this is in getting back onto a sound financial basis after the emergency has passed, repaying the overdrawn amount, and funding the interest and fees which compound the deficit. I do think banks need to be more understanding and take a more personal interest in their customers rather than apply a one-size-fits-all policy; this needs to include a realistic assessment of the costs and losses for the bank if the customer totally defaulted and enabling the bank and their customer to negotiate a realistic and affordable plan [accompanied by other money-management obligations for the duration]. This would be smart banking; not the press-button-banking that leaves so many people increasingly worse off. Where is the sense in that?

A key point you raise John is, I think “getting back onto a sound financial basis after the emergency has passed, repaying the overdrawn amount. An overdraft is, as far as I know, really meant to be a short term loan. It should be made available to people who the bank know will be able to repay them, hence the need to agree an overdraft facility with the bank. I do not see why we expect a bank to lend money to people who cannot repay – the cost will eventually be borne by their other customers.

The problem now seems to be changing terms – perhaps under pressure to accommodate unreliable borrowers – such that Lloyds, and maybe others, will charge what are seen as excessive amounts to all. Or simply refusing to make any payments that would take a customer overdrawn. Unintended consequences?

It’s all very well to encourage people in debt to sort out their financial affairs, but I wonder how we would cope in their shoes. I accept that banks have to make a profit but I would prefer if we put an end to free banking so that those in debt were not subsidising those who enjoy free banking services by avoiding going into debt. Like many, I have a long list of direct debits, including one for as little as 79p per month. This service, online banking, use of ATMs, processing a few cheques, and the occasional paper statements cost me nothing. The bank has the use of the surplus balance in my account but I very much doubt that this helps much to offset the cost of running my current account.

I would agree that the scandal is the profiteering on personal financial difficulties. If running overdrafts, under sensible but non-profit-making terms and conditions, meant that my current account services attracted a charge I would not complain. There is a complete lack of transparency in this though.

It might be that we are approaching, through this change of policy by Lloyds, the point where, as Malcolm has frequently warned, the banks will actually not execute payments if doing so would increase an overdraft. I believe this would send a powerful shock-wave through their customers’ accounts as rents and mortgages went unpaid, motor insurances were stopped leading to illegality, and even withdrawals or debit card payments to buy food were denied. I am not sure that society could cope with that which might be why it hasn’t happened on a wide scale.

It would be interesting to know what percentage of customers with overdrafts could pay them off in six months if they had to, and the percentage that are effectively permanently overdrawn and can do very little about it; even personal loans would hardly help the second category.

“ sort out their financial affairs. At some point they have to. They cannot go through all their life being subsidised by commercial business (as banks are).It is the job of the state – our taxes – to help financially those who cannot help themselves. Others need to be helped in different ways.

I would like to see the banks, collectively through the BBA perhaps, offer two new services. 1. Home money software to help people keep track of all their finances and 2. budgeting advice and software to help them organise their spending and income. It would be useful to provide these in paper format also. I would have hoped Which? might also have devoted some resource to doing the same – it nwould be a very useful social service for them to give away.

An app on their Iphone perhaps.Although if many do internet banking they’ll have the tools.As I have said earlier, and John has repeated, a consequence is the banks may simply stop paying your bills if you haven’t got any money. Not a good outcome for some.

Agreed my Husband has an occasional overdraft with Lloyds . Lloyds have started charging the daily interest which I also calculate to be an interest rate of 51% on top of the £6 per month charged for using the overdraft facility. How can this huge interest rate be justified?

Well it’s the 7th of November now and these new overdraft fees are destroying people. Push people more and more in debt. People with large overdraft may never pay them off. Lloyds is doing nothing to help these customers it’s plunged into further debt. You only to look st Lloyd Facebook page to see the impact these new fees have had.

Lloyds used to charge a £6 a month usage fee if you went over your buffer for arranged overdrafts, and 18.9%. Seems reasonable. Now we have the daft arrangement that responsible borrowers are treated in just the same way as irresponsible ones who do not, or cannot, arrange an overdraft. So you pay the equivalent of 52%. In practice, I suspect Lloyds will just refuse to make payments if you exceed your agreed borrowing limit (£0 in the case of those who don’t make an arrangement); so watch out for unpaid insurances and other bills that might penalise you.

We should always be careful what we wish for, particularly if it doesn’t make a lot of sense.

We have agreed overdraft of £4K and use around £2k – my charges have doubled to £90 per mth – rang the bank and they said get a lloyds Visa card or lloyds loan – they are just selling more products – I use my overdraft so I did not have a Visa card – this is just crazy

As a responsible arranged overdraft user, you may be being penalised for the move to charge you the same as those who do not bother to arrange, or who are nor suitable candidates for, an overdraft. The rate is equivalent to 52% a year. You are far better off using a credit card at 18.9% or paying off your overdraft with a loan. I’d take up one of those options.

My Halifax reward account fees have gone from a straight forward £85 a month thats charged just after I get paid to £6-£7 a day so around £220 a month going forward BUT I will also pay £40 a month on old system for two months so £260 a month right before xmas

It is very poor. When I was a banker I would have argued strongly that you shift the overdraft to a loan that would be a lot cheaper. Interest free charge cards also work out cheap provided you overpay to reduce the debt by the time the interest free period ends.

I presume you have around a £5000 overdraft? (The Halifax account I believe costs £15 a month and offers a £300 fee-free overdraft, then 1p a day per £7 borrowed). Time, isn’t it, perhaps to take out a loan and pay off your overdraft or transfer spending to a credit card, then leave Lloyds. If you moved to Nationwide they’ll charge, it seems, 18.9%, so around £79 a month.

Lloyds bank advised me that I shouldn’t be using my prearranged overdraft on a regular basis and I wouldn’t be charged…this was their explanation………….even when I complained the manager of the complaints department advised the same…..confusing or What???????

It is an expensive way to borrow money. I think they were giving you good advice. Lloyds say on their website:“Personal overdrafts
A personal overdraft could help tide you over for a short while, in case your funds dip a little too low

About personal overdrafts
What is a Planned Overdraft
A Planned Overdraft is an overdraft up to an agreed limit, which you arrange with us in advance. It’s perfect for short-term borrowing, there is no set-up fee, and you’ll only pay a daily overdraft fee if you use it.

Reasons to set up a Planned Overdraft
A Planned Overdraft can be a safety net to cover unexpected costs like essential repairs or an unexpected bill coming out of your account.
Having a suitable Planned Overdraft limit set up can help you avoid having your payments returned or declined.

So, the cost for those who have unauthorised overdrafts reduces while the cost for those with authorised overdrafts increases. Exactly how is that fair in anyone’s definition? The cost of Lloyds Bank’s outrageous fee structure has been understated in the press. As the fee is levied daily there is a compounding effect – you end up paying fees on fees on fees etc. The true equivalent annual interest rate is 68.4%.

I am a single mum and i live in my overdraft! I cannot afford these changes, my only option is to go to another bank and arrange with Lloyds to pay them back my overdraft. To be honest they can take me to court i am outraged at this change, I never go over mt limit always and have been a customer for 35 years! Seriously they can chase me for their overdraft money!

Since the agreed overdraft charges have gone up by 52 per cent my husband moved bank to TSB at the minute there charges are reasonable he doesn’t have an overdraft but my grandkids might in the future they’ll have no leeway with these charges

On 8th Dec Which? say ” We want the regulator to restrict unarranged overdraft fees, bringing them quickly into line with arranged overdraft charges.”

Can they explain why a bank should charge someone who has applied for an overdraft, been assessed as a good risk for the amount involved, and been granted an overdraft facility, just as much as someone who has not bothered to ask and who may not be in a position to repay an unarranged deficit in their account? The likely outcome may well be that unless you take the trouble to ask your bank, they may not make a payment that would take your account into the red; that may mean your car insurance will lapse, your credit card bill will be unpaid and attract a penalty, and other regular payments may not be made.Is that a good outcome? Or are we happy to see responsible bank users subsidising the irresponsible?

Surely we should be looking at justifying the overdraft charges in general. The “daily charge” (52% + APR in Lloyds case) is far too much. A sensible annual rate nearer that offered by credit cards would be fairer. Overdrafts should be for short term requirements; a personal loan is more appropriate for a longer loan,

Which? could help, perhaps in conjunction with the banks maybe via the BBA, by producing booklets to help people organise their finances and keep a check on their assets. Avoiding going overdrawn for anything but a short period should be the objective, assuming you have arranged your outgoings properly in relation to your income.

High overdraft charges are funding current accounts, is said in another Convo. I’m not a banker, so can only go on what I find on the net. One bit of information is that unauthorised overdrafts generate around £1.2bn for the banks a year. That’s a lot. Another report says there are 65 million personal current account customers. Spread the income over those current accounts and it is about £18.50 each. That does not now seem to me to be a lot towards maintaining a “free” account – administration, paying direct debits, looking after online transfers in and out, dealing with cheques, before we start paying for premises, wages, and, of course, a profit.

Some banks are preventing unauthorised withdrawals that would take a customer into the red.

Another site shows how the cost of unarranged overdrafts has been reduced.

Which?Money lists those banks offering current accounts that have “Best rate” overdrafts. These range from APRs of 15.75 to 18.9%, which for an average £500 overdraft for 2 weeks a month cost between £17 and £40 a year. Not something I see as excessive, nor untoward in paying for current accounts.

It seems to me the overdraft issue is not as one-sided as it is portrayed. I would be happier if in dealing with these sorts of topics, this kind of information (assuming mine is correct) were included, for our education and for balance..

Correct. so we need to help people avoid unplanned overdrafts, or divert them to accounts that make sensible charges (not Lloyds, in my view, but those recommended by Which?) The principle surely should be if you are likely to go overdrawn, talk to your bank. It is not only courteous, but likely to be in your best interests (no pun intended). The figures I found seem to give a good picture of the scale of unarranged overdraft charges seen against 65 million current accounts.

My view is that if a bank believes an overdraft will not be repaid, or will put the customer into financial difficulties, their responsible action will be not to grant it. We criticise some banks for increasing some customer’s financial problems, so we can put a stop to that.

I also believe alongside any regulatory changes we should be making material available to help customers run their financial affairs on a sound basis.

I’m happy with the approach that Which? has advocated and I do hope that we will see the end of all punitive interest charges soon.

Though I would like all companies dealing with the public to show consideration for their customers as well as their shareholders, the only way of ensuring this at present is by regulation and monitoring compliance. I suspect that the best way to ensure that banks help customers is for the regulator to produce standard guidance for the companies to follow. Perhaps Which? could help produce printed and online advice but I believe that a face to face approach is vital.

The question that always seems to be evaded is why do some customers expect to borrow money from their bank without asking? What stops them from arranging an overdraft facility and thus saving themselves from unnecessary charges? Perhaps they realise they are a bad risk and will be turned down.

Which?, besides addressing punitive charges, could also advise customers how to better deal with their bank. Equally banks should not support unarranged overdrafts, and it seems the trend to not allow such customers to go overdrawn any longer.

Since the interest rates are published, unarranged overdrafts are one of the services offered by banks. A very lucrative service despite the fact that a minority default on the loan. If banks don’t stop punitive interest rates then I expect there will be pressure for them to be capped.